Ny In Multi-state Lawsuit Against Bristol Meyers-squibb For Patent Manipulation Of Cancer Fighting Drug

New York Attorney General Spitzer today filed an antitrust lawsuit charging drug-maker Bristol-Myers Squibb Co. with a fraudulent scheme to illegally maintain its monopoly over its costly and widely used anti-cancer drug, Taxol.

In a complaint filed with 32 states and territories in federal court in Washington, D.C., Spitzer alleged that Bristol violated federal and New York State antitrust laws by securing patents through fraud and plotting with a co-conspirator to illegally manipulate regulatory and judicial proceedings.

"The increasing price of prescription drugs is of major concern," Spitzer said. "My office will continue to pursue these kinds of cases where it is apparent that illegal activities are taking place. We cannot tolerate anti-competitive and deceptive practices that allow drug companies to fatten their bottom lines illegally at the expense of people who depend on this drug."

For a time, Bristol successfully blocked competitors from bringing lower-priced generic versions of the anti-cancer drug to market. As a result, the lawsuit claims Bristol reaped millions of dollars in illegal overcharges from hospitals, cancer treatment centers, state agencies and others who had no choice but to purchase Bristol's high-priced version of the drug.

Taxol is not purchased directly by consumers, but is administered by physicians and hospitals to patients suffering from breast, ovarian and other cancers. A course of treatment based on Taxol frequently costs from $6,000 to $10,000; the cost of a dose of the branded medication currently is approximately $1,625, while the same dosage marketed by a generic competitor may cost $1,200. In 2000, Bristol earned nearly $1 billion in revenue from U.S. sales of Taxol; in 2001, Taxol revenues dropped to $545 million as a generic version of the drug became available, despite Bristol's illegal conduct.

The complaint charges that Bristol, despite assurances given in congressional hearings that Taxol was unpatentable and would enjoy no more than five years of marketing exclusivity, illegally obtained patents which it then misused to block generic competitors from marketing competing drugs.

Specifically, the complaint alleges that:

- Bristol repeatedly and deliberately misrepresented and concealed the state of scientific research on the subject to the United States Patent and Trademark Office, thereby fraudulently obtaining two patents on methods of administering the drug;

- Bristol then misused the patents -- despite its knowledge that they were invalid -- in proceedings before the FDA, to delay required regulatory approvals for competitors seeking to market generic paclitaxel products; and

- In order to delay the marketing of generic competitors further, Bristol filed numerous lawsuits against them, charging them with infringing the patents, despite Bristol's knowledge that these lawsuits were without any legal or factual basis and were pursued for anti-competitive purposes.

When Bristol's initial patents were declared invalid by the courts, Bristol colluded with another firm, American BioScience, Inc., in a similar scheme to use another patent held by ABI to further delay competition from generic drugs.

As a result of these and other fraudulent and anti-competitive practices, the states' complaint alleges, Bristol was the sole marketer of paclitaxel-based anti-cancer drugs in the United States until October 23, 2000, and until April, 2001, was one of only two companies approved to sell such drugs.

Taxol is based on a naturally occurring plant substance, paclitaxel, whose anti-cancer properties were developed through government-funded research. Bristol entered into a technology transfer agreement with the National Cancer Institute which granted Bristol exclusive access to that research in return for a commitment to obtain the necessary regulatory approvals and bring a paclitaxel-based drug product to market. In 1992, Bristol obtained FDA approval to market its paclitaxel-based medication, Taxol, exclusively for a period of five years.

New York was one of a group of states that spearheaded the investigation of the case, which led to the filing of the suit. New York is co-leading another multistate group in a separate legal action against Bristol, charging it with using illegal tactics to keep generic competitors to BuSpar, Bristol's, anti-anxiety drug, off the market.

The matter is being handled by New York Assistant Attorneys General Richard L. Schwartz and John A. Ioannou, under the supervision of Antitrust Bureau Chief Jay Himes.